The top executive of J.C. Penney Company, Inc. (NYSE:JCP)’s Home Department resigned from his position after the company completed renovating its shops in approximately 500 stores last month.

J.C. Penney

Departures from J.C. Penney

A spokesperson for the department store chain confirmed the departure of Paul Rutenis, SVP and GMM of Home Department at J.C. Penney Company, Inc. (NYSE:JCP). He joined the company as vice president for furniture and decorative accessories in May 2011. He was promoted to head the Home Department of JC Penney in May last year, and led the launching of the department store chain’s new Home Department.

Analysts at Citi Research noted that the departure of Rutenis highlights the struggles of J.C. Penney Company, Inc. (NYSE:JCP) given the fact that the new Home Department failed to drive traffic and re-engage core customers.

Citi Research analyst Deborah Weinswig also noted that J.C. Penney Company, Inc. (NYSE:JCP) decided not to renew the contracts of marketing consultants Sergio Zyman and Jeff Herbert. Their contracts will expire this month.

Downside risk for margins

According to Weinswig, the latest changes provide downside risk for the company’s 2Q13 SSS and margin. The research firm estimated that J.C. Penney’s SSS for the second quarter will decline by -5% and expects -$0.82 losses per share.

On the other hand, Weinswig emphasized that the Home Department of J.C. Penney Company, Inc. (NYSE:JCP) only accounts for 12% of its sales, and the primary driver of its revival is the improvement of its apparel business.

“The company is squarely focused on having a successful B2S season and expects a more aggressive marketing strategy and better inventory position to help reverse the trend of declining traffic and conversion,” wrote Weinswig in a note to investors.

In addition, the analyst believed that J.C. Penney Company, Inc. (NYSE:JCP) will refocus its strategy in home basics at good/better price points compared with its new brands at best price points. The company is expected to highlight its private label offering, and to increase its sales and promotional activities such as the Back-to-School campaign.

Weinswig believed that the company’s advertising budget outside its targeted marketing events will be more limited, but will increase its budget in target marketing campaigns. She noted that the company re-started promoting to its private level credit cardholders, which is the bread and butter of JC Penney’s customer base.

J.C. Penney courting Kraft Foods exec

Furthermore, analysts noted that since the departure of former CEO Ron Johnson, there have been 10 senior executives who left the company, and the company is working to fill key positions that are still vacant, including Chief Marketing Officer, Chief Technology Officer, GMM of Home, and EVP of Real Estate.

It has been reported that the management of J.C. Penney Company, Inc. (NYSE:JCP) is courting Debra Berman to serve as chief marketing officer. Berman currently serves as vice president of marketing strategy and engagement at Kraft Foods Group Inc (NASDAQ:KRFT).